More and more employees are worrying about their financial situation. This, according to the American Psychological Association, comes at levels that are higher than what is deemed acceptable. Younger people, parents, and those living on an income of less than $50,000 experience the most financial stress. If the describes your employees — then it’s something you should be concerned about as it affects your bottom line.
Negative Impact on Health
Not surprisingly, financial stress has a negative impact on health. On top of the list of many employee concerns is that to in order to make ends meet, many people no longer prioritize their healthcare needs. Add this worry on top of medical conditions brought on by stress and it’s a self-feeding loop.
In a recent study, some have considered not seeing the doctor (9% of the respondents) when the need arises. The fact that a slightly higher number of people (12% of the respondents) have skipped going to the doctor altogether is even more alarming.
Stress also has repercussions on the social lives of people. In fact, 31% of adults with partners say that money is often a source of conflict in the relationship.
These numbers paint a telling picture. Despite recovery from economic recessions, many people still cite financial stress among their top concerns.
Income Gap Factor
Higher and lower-income households also experience a gap in the stress levels they experience. This is in stark contrast to stress levels a few years ago when there was nothing to suggest a significant gap was present.
But now, a clear gap has emerged with lower-income households citing higher stress levels compared to higher-income households.
Despite an overall reduction in stress levels, the average person still deals with higher levels of stress that is deemed healthy. This means otherwise productive members of the workforce may become a problem for businesses.
Negative Impact on Business
Beyond affecting their personal lives, financial stress on employees also have adverse effects on businesses. Among the negative implications are:
- Absenteeism – Employees worrying about their finances tend to use more of their sick leave and don’t go to work as often.
- Lack of focus – Despite being present at work, they spend more time on unrelated activities such as talking to creditors and exploring their options. Moreover, many lose their focus and think about their finances up to three hours per day.
- Low productivity – Several studies point out that companies stand to lose as much as 20 hours of productivity a month for every affected employee. This translates to around $5,000 of added cost per employee per year.
- Health issues – As mentioned earlier, financially-stressed employees forego their healthcare needs. In turn, this leads to health issues that affect productivity and quality of work. This also contributes to fatigue, sleeplessness and anger.
- Higher insurance rates – Stress in general can cause serious medical issues such as heart disease, eating disorders and substance abuse among others. For this reason, it is quite common for insurance rates to go up for companies with employees experiencing stress-related illnesses.
- Workplace conflicts – Employees who are stressed out are less able to contain their personal issues at work. This results in incomplete tasks, tardiness and even accidents.
- Dependence on employee benefits – Because of financial trouble, a significant number of employees may turn to the company’s benefits programs to help with their needs. Increased borrowing and frequent requests for pay advances are some of the telling signs of this. In turn, this could drive up costs for the company.
- High turn-over rates – Financially-stressed employees may seek employment with better pay. This forces companies to get new hires that may not have the same experience and expertise. High turn-over rates forces the company to adjust constantly preventing them from relating with their staff.
- Lack of commitment – Regardless of how much they make, employees experiencing financial stress are less contented with their pay. This could lead to a lack of commitment to their work and dissatisfaction towards their employer.
Financial stress isn’t just a stress for your employee — it’s a stress on your bottom line as well. This issue should be dealt with sooner than later to improve their sense of well-being. An employee who feels secure tends to perform better and becomes a valuable asset to your company.